TOTAL TRANSPARENCY REQUIRED IN MINIMUM WAGE DELIBERATIONS

TOTAL TRANSPARENCY REQUIRED IN MINIMUM WAGE DELIBERATIONS

Political interference must cease.

Duality of economy must be taken into account in assessment.

Knock-on wage increases inevitable.

ISME, Monday 13th April 2015.

ISME, the Irish Small and Medium Enterprises Association called for total transparency in all Low Pay Commission deliberations on the National Minimum Wage (NMW). The Association warned of previous similar exercises in benchmarking, driven by politics, where all decisions were carried out behind closed doors, leading to disastrous results and consequences.

ISME, CEO, Mark Fielding drew attention to the wording of the Low Pay Commission Bill where it is stitched into the bill that it is intended to ‘progressively increase’ the Minimum Wage. This is despite the assertions that the Commission will base its findings on ‘empirically based evidence’, whereby, it is assumed that wages can go down as well as up.

“In this instance we must have an open door policy where all evidence is open to scrutiny. The effect of wage increases on small and medium businesses is critical to the survival of many and the knock-on effect on higher wages could put a business under, with the resultant job losses.”

“Wage costs in SMEs, on average, account for 50% of added value, while in a large multinational the average is 8%. Therefore any increase in wages has at least a six-fold negative effect on small business over the multinationals. This negative effect can be even greater in many sectors where the wage content is even higher. The inevitable knock-on effect of changes in the NMW must be addressed by the Commission. It is a key reference point and creates a knock-on effect, as higher paid employees use it as a benchmark from which to negotiate wage increases.

“The Commission must take into account the duality of the economy and the substantial upward bias in national productivity and competitiveness, driven by international companies based in Ireland. It has to be realised that Ireland is still a high cost location for a range of business inputs and the cost of labour is the most significant driver of business costs for all indigenous enterprises.”

“It is therefore imperative that accurate and relevant figures are used in the deliberations of the Commission, otherwise the labour-intensive indigenous SME sector will be paying an unwarranted premium on wages, based on the mechanised, technically advanced and low labour companies which make up our multinational cohort”, Fielding concluded.